U.S. settles Indian trust account lawsuit

Reporting from Denver — 

The Obama administration on Tuesday announced it would pay Native Americans $3.4 billion to settle a class-action lawsuit that claimed the federal government cheated tribes for more than a century of royalties for oil, mineral and other leases.

The settlement ends a 13-year legal battle that led to 3,600 filings, millions of pages of discovery documents and 11 separate appellate decisions. It is the largest settlement Native Americans have ever received from the federal government, eclipsing the sum of all previous settlements, according to the plaintiff’s lawyers.

The dispute stemmed from a 19th century decision to grant parcels of land to individual Indians and place the properties in trust accounts. For more than a century, the plaintiffs contended, the account holders were cheated out of their share of revenues that the federal government collects for leasing that land.

“We are here to right a past wrong,” Interior Secretary Ken Salazar said Tuesday at a Washington, D.C., news conference to announce the settlement, which still must be approved by Congress and the courts. He was joined by Atty. Gen. Eric H. Holder Jr. and Elouise Cobell, the lead plaintiff in the class-action lawsuit.

“I expected this settlement 10 years ago,” Cobell said. “Today we have an administration that is listening to us, an administration that is willing to admit the errors of the past.”

The plaintiffs had estimated they were owed as much as $47 billion. Congress had considered, but did not pass, a nearly $8-billion settlement as recently as 2006.

Cobell said she had to weigh the possibility of winning a greater sum against the tough situations faced by many of the plaintiffs.

“Time takes a toll, especially on elders living in abject poverty,” Cobell said. “Many of them died as we continued our struggle to settle this suit. Many more would not survive long to see a financial gain, if we had not settled now.”

President Obama had specifically directed his Cabinet to settle the matter when he took office, Salazar said. The president issued a statement Tuesday praising the deal and urging Congress to swiftly finalize it and “correct this long-standing injustice.”

“As a candidate, I heard from many in Indian country that the Cobell suit remained a stain on the nation-to-nation relationship I value so much,” Obama said. “I pledged my commitment to resolving this issue, and I am proud that my administration has taken this step today.”

The settlement, finalized Monday night after months of intense negotiations, provides a $1,000 cash payment to every individual who has a trust account and $2 billion for the federal government to buy back the land parcels, some of which have been subdivided so much over the decades as to become almost worthless.

The government would consolidate the parcels and then return them to tribes. It would also provide up to $60 million for scholarships for Native American children.

Salazar said he was also creating a commission to recommend how to manage the trusts in the future.

The trusts date back to the 1887 Dawes Act, which attempted to erode the tribal system by granting parcels of land to individual Native Americans.

The Indians were not allowed to control their new property. Instead, the land was placed in trust and the government promised to pay the owners royalties for oil and gas, grazing or recreational leases. For more than a century, however, Indians received little or no payment.

In the 1990s, Cobell, a banker and rancher in the Blackfoot Nation in Montana, decided to do something about it and filed a class-action suit, funded partly by nonprofit groups.

Now, the government and the plaintiffs will have to determine who gets paid and whose land can be bought. The records are in such disarray it is not clear how many individuals are affected by the settlement -- estimates range from 300,000 to 500,000 people.

Those affected are mainly in the western United States, with the greatest concentration in the Great Plains and Montana, attorneys said.

In Washington, both Salazar and Cobell said they hoped the settlement could help create a more trusting relationship between tribes and the government.

Carl W. Tobias, a law professor at the University of Richmond in Virginia, noted that Native American distrust of the government long predates the tough stance the Department of Justice took in litigating the lawsuit.

Still, he said, the settlement could change attitudes.

“The Obama administration has made an effort to reach out to Native Americans in a number of ways,” he said. “In modern times, this is probably the biggest piece of litigation” against the government over mistreatment of Indians.

“In that way, this has a lot of symbolic impact,” he said.

nicholas.riccardi@latimes.com